Of course there's a tablet market - just maybe not a massively lucrative one outside of the ipad.
I've got an S6 and it's a stunning screen to consume widescreen media on with great speakers (and occasionally I piss about with the pen to make animations).

I didn't make my decision in comparison to an ipad (that would have won easily, it's an ipad) - I just wanted an open tablet, and then something with a better screen and speakers than a chinese no-name.

I think there's a pretty healthy market for google to make a tablet. Pro features for the price of an air. Apple have put themselves over a barrel - their cheap stuff can't be 'good enough'.